Sun Microsystems will today unveil a set of bruised year-end results after a sustained bout of turbulence in global markets has left consumer spending on the ropes.

The US computer giant's announcement recently that quarter four earnings will drop below last year was as much a concern as it was expected.

Sun said revenues for the last three months to the end of June would range from $3.73 billion to $3.8 billion, as compared with $3.835 billion for the fourth quarter of fiscal 2007.

The dip in like-for-like earnings is the latest sign of strain in the global computer industry, but was a lot more favourable than investors had feared. Sun witnessed a rally in its stocks shortly after the preliminary results were released. Apparently Wall Street had a more modest $3.798 billion in mind for the firm.
Sun has been particularly hit in its home US market as well as Europe, according to Denis Heraud, President for Emerging Markets, who told Emirates Business he was relying on growth in the Middle East to overcome the slump.

Heraud's division, which was set up on July 1, is hoping to capture the unprecedented growth in emerging economies such as the Middle East, as well as China, India, Latin America and Russia.

He said Sun's business has grown by 30 per cent in the Gulf region alone in the last year. And the firm's addressable market in the region will hit an estimated Dh3 billion ($825 million) by the end of 2009, Heraud said.

Emirates Business asked Denis Heraud, President for Emerging Markets at Sun Microsystems, about future plans:

Which markets is Sun targeting in the coming year?

At the beginning of July we set up the emerging markets division to take advantage of the fastest growing regions in the world currently. The Middle East and North Africa region is included in this division, as well as the southern part of Europe, Russia, Latin America, China and India. In these economies we also see the I.T. markets growing much faster than western markets such as the US. We will continue to invest more in these emerging markets and increase our market share.

In the Middle East region, specifically the UAE, we have seen very solid growth in the last few years. We benchmark ourselves against the market, and we've posted 20 per cent growth in this region, which is above the market. This is not just the case in the UAE, but also in countries such as Bahrain, Kuwait, Saudi Arabia and Egypt.

There is a lot of discussion about the Bric countries – Brazil, Russia, India, China – but we have decided not just to focus on them but to look more broadly, and to include more countries of eastern Europe, Middle East and Africa.

Which Sun products have driven growth in the Middle East?

Initially the demand was driven by the hardware products, mainly in servers and storage because the priority for Middle East countries is to build infrastructure and data centres. So we had a lot of projects with companies in industries including telecoms, financial services, oil and gas, as well as governments.

We are also seeing a lot of demand on service side of our business, where we would for example run the billing operation of a teleco operator, which incorporates our software. The importance here is that these companies cannot afford any downtime.

We are now much more balance between hardware and providing services.

Who are your local Middle East business partners and competitors?

It's mainly the telco operators, financial institutions and government. Oil and gas is also a very big market for us here. We have a global agreement with Etisalat, providing infrastructure and networks. So any branch they open in the region they've partnered with us to provide the infrastructure and data centres for the operation. Also, one of the big references we've got at the moment is with Al Khaleeji Bank.

In terms of our competitors it's very similar to what we have worldwide. The market is divided between HP, IBM and Sun. For example, we compete with these companies in the US market in terms of technology.

Sun's emerging market division was set up on July 1. How important is the Middle East in that compared to China, India or Brazil?

In terms of size, the Middle East is smaller, but growth is much larger. It's growing faster than China, which has witnessed eight per cent growth, but at the same pace as India, about 15 per cent. Just for the Gulf countries, this figure is closer to 30 per cent. In Latin America this is about eight per cent. Compared to worldwide market growth, which is four to five per cent, it's clear market growth in emerging countries is more than twice the growth we experience worldwide.

We expect this growth to continue and don't see any signs of it slowing down in the Middle East, although there's obviously some global factors we have to take into account, like the potential recessions in the US and Europe.

Sun's addressable market will be about Dh3 billion ($825 million) over 2008 and 2009 for UAE, Saudi, Kuwait, Qatar, Bahrain, Oman, Egypt, Jordan and Lebanon.

There is an expected drop in Sun's quarter four revenues to be announced today. Are you relying on emerging markets like the Middle East to get you on the road to recovery?

The Middle East is a very important market. Obviously it's important that Sun is successful in other economies, like Europe and US, which are bigger in terms of size but it's absolutely key that we continue to gain market share in emerging markets. But, in answer to the question, yes, absolutely.

The region is quite unique. We have a high level confidence about the market and it will be one of our key targets in terms of investments, which is something I'm discussing with the management at the moment. We don't see any sign of a slowdown here either.

What we have seen in quarter three is a downturn in the US, which wasn't expected. But clearly we see the emerging markets as an area where there is no slow down.